Forex Blog: Currency Trading News & Analysis.

July 22nd 2007

Economic woes plague Dollar

The story behind the Dollar’s decline contains two threads:
narrowing interest rate differentials and growing concerns surrounding the US economy. With most of the industrialized world’s Central banks not scheduled to meet again for a few weeks, the interest rate story can temporarily be placed on hold in favor of the economic story, which is becoming uglier every day. The centerpiece remains the US housing market, which many analysts believe will soon slide into a major rut. There is a great deal of uncertainty over whether homes can retain their value and if borrowers will be able to pay off their mortgages. Rising rates have squeezed many low-income, high-risk borrowers, causing a crisis of growing proportions in the market for mortgage-backed securities, which is at risk for spreading to other areas of securities markets. Forbes reports:

“Credit concerns, rating reviews, yields tumbling; it has been one-way traffic against the dollar in recent minutes and euro/dollar has rallied up a fresh all-time high.”

Read More: Dollar slump sends euro
to record high

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Posted by Adam Kritzer | in Economic Indicators, US Dollar | No Comments »

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